Gillard plan for saving on power

HOUSEHOLDERS willing to switch off air conditioners and other appliances on hot days would be big winners under Julia Gillard's plan to drive down power bills.

A key part of the PM's plan is based on Productivity Commission advice to introduce radical new tariffs for households, saving them up to $250 a year.

The new tariffs allows households to sign up for cheap rates at "off peak" times, if they agree to be slugged hefty charges during extreme heat or "critical peaks".

But families may have to wait several years for the full benefits of changes proposed. An agreement between states and the Commonwealth on all aspects of Ms Gillard's plan is unlikely on Friday.

A slanging match has already developed, and one senior source familiar with the COAG process said parts of the plan were almost "never, never".

Meanwhile, a report to be released today by the COAG Reform Council warns some national energy reforms agreed to several years ago are now in danger of failing.

The report says eight key reforms, including energy market changes to bring in smart meters and boost competition, had stalled and, if they fell over, would cost the economy "billions".

This puts further doubts on the appetite for following through on serious reforms.

Only Victoria has rolled out smart meters, which allow households to see how much energy they use and to cut use when the network is congested - a major reason distribution businesses accused of "gold plating" have built up the network.

This would save all households money, even if they didn't opt for critical peak pricing on hot days, because businesses would spend less money on poles and wires.

But the Energy Networks Association says that "consumers shouldn't expect to see any falls in their electricity bills soon".

Independent Senator Nick Xenophon has also warned it could be a "decade" before these changes and associated savings are achieved.

Consumer group Choice said it was important to take the first steps to savings and it will launch a petition today to urge states to move forward on energy market reform.

Opposition environment spokesman Greg Hunt said a greater ability for businesses to "power down" for discounts on hot days would be welcomed, but that there was a quicker way to reduce bills.

"First and foremost, it is to drop the carbon price, it's 10 per cent and it's not embedded in the cost of electricity," he said.